Growing your business - Wondering whether you’re ready? You’re in the right place. We look at some of the common pitfalls to avoid.
If you’re a business owner, you’ve probably heard of some well-used business buzzwords like scaling up, growing your business or even explosive startup growth.
These terms might be business jargon, but that doesn’t mean there’s no credibility at all to such statements.
Once you’ve hit a plateau in business performance or met your initial business goals, it might be time to set your sights on expanding your company.
Eventually, you might want to hire more staff, open a new location, or enter new markets. The problem is, how do you know when your business is ready to grow? This process is different for nearly every entrepreneur.
If you’ve ever wondered whether you’re ready to expand your business, then you’re in the right place. We’ll look at some of the common pitfalls of growing too fast or at the wrong time so that you can avoid stretching yourself too thin when you decide to grow.
Dangers of scaling too quickly
When you’re reading about business performance, you might feel a sense of urgency to expand quickly. However, while there are advantages of making the leap and growing your business, there are also lots of dangers of doing it too fast or when you’re not ready.
Be aware of these common pitfalls of premature business growth:
- Hiring someone before you really need them. If a sales lead falls through or your business changes direction, you’ll have an extra staff member to think about.
- Hearing more complaints. These could come from customers, clients or even employees. They occur when you let your normal business operations slide by diverting your attention to growth.
- You turn away from what you’re good at. It can be tempting to pivot your business in a drastic way in order to stay on the cutting edge. But doing so might mean scrapping something you’re known for rather than building on what made you successful in the first place.
- You burn yourself and your employees out. By taking on too much, too quickly, you run a serious risk of overtaxing your employees, leading to more stress and less productivity.
- You get ahead of yourself. In other words, your expansion takes you to a place far beyond your original plan. It’s kind of like travelling down a road that you’ve never been on before (and leaving your map at home) – you might get lost.
Measures to avoid when thinking about growing your business
Don’t get swept up in the glamour of growing your business. Business expansion can be an exciting time. But there are plenty of resources out there that sell you on the limitless potential of your business.
We hate to be the ones to break it to you, but there are limits for your business. Constraints are a natural part of operating a company in the first place.
One of the most common ways to get distracted is to pay too much attention to vanity measures. These are statistics that you’re encouraged to measure but really only sound impressive. They sound great but lack a punch in terms of actually teaching you anything about your capacity.
Watch out for these vanity metrics
- Number of new customers: whether you’re a software company or a human resource consultant, you probably keep track of a similar metric. You can loosely define it as new sales. Don’t get fooled into thinking that just because you see a spike in sales then you’re ready to expand your business.
- A healthy alternative to consider is how much it cost you to get those new customers vs how much you’re earning per customer. By thinking about your customer acquisition cost, you’ll be able to figure out how sustainable your operations are before making a decision that could self-destruct your business.
- Number of employees: you need employees to grow, it’s true. But just because you have a solid roster of employees now, doesn’t mean that they’re equipped to handle the challenges of scaling your business.
- Instead, ask yourself “how resilient are my employees?” Considering employee satisfaction and employee skillset is a good way to know whether your employees are adaptable and ready to put in the longer hours that might be required for growth, or whether they need upskilling before doing so.
- Financial capital: having financial assets on hand is important. But considering availability alone can be misleading. Just because you can afford to hire a new employee or upgrade your IT system doesn’t mean that you should.
- Rather than looking at how much you have in your bank account to spend, consider the return you get from your current spending. Shift your focus by thinking about the efficiency of your current financial resources rather than tying them up in a growth activity that you might not be ready for.
Growing pains of scaling a business
Growth is a challenge for even the best-prepared and most well-run companies.
Using the right measures to help you decide when to grow your business will help you in the long run. But it won’t save you from the fact that your business will experience some growing pains.
To set yourself up to succeed, make sure you dedicate the right resources to help your expansion efforts. Utilising your resources, and adding new ones where possible, will help limit your growing pains. Here are some tips for doing just that:
- Let your customers do some marketing for you. Implementing a customer referral program is a great way to access the networks of your current customers and expand your sales in a resource-efficient way.
- Ride the wave of new trends. Companies have been doing it for decades. When done successfully, you can organically increase your sales by focusing your efforts on the real-time interest of your customers. Just be careful – relying too much on trends can make your business obsolete quickly.
- Hire the best staff. This widely-used business principle is easier said than done. Check out some tips to hire the right employees so they are ready to roll their sleeves up when the time comes.
- Always remember – your customer is king (or queen). Your growing business has an advantage compared to a large, sluggish organisation – you’re far more adaptable. Listen to your customers and improve your products and services in ways that benefit them the most.
No matter the situation, your business expansion involves a huge demand on your resources. Before making any commitments, you better be very sure that you can meet that demand.
By following the tricks outlined here, you’ll be able to grow your business smartly by utilising your resources efficiently. By getting the most out of your existing assets – your skills, time, employees and customers – you’ll be able to manage the risks associated with expanding your business. Book a free 15-minute discovery call to find a business coach to help grow your business today.